Dodd Asks for $500 Billion Credit Line for FDIC

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Chris Dodd, the Senate Banking Committee chairman, has, in response to a request from FDIC chairwoman Sheila Bair, written a bill moving to allow the Federal Deposit Insurance Corp. to temporarily borrow up to $500 billion from the Treasury Department, The Wall Street Journal is reporting. This is a fairly huge deal, as up until now, the amount the FDIC has been allowed to borrow has been capped at $30 billion, and the FDIC hasn’t borrowed money from the Treasury at all in over ten years. But now, FDIC funds are at their lowest in 25 years, and their usual method of replenishing them — charging the banks fees — doesn’t really seem prudent, what with the banks being dependent on the Treasury themselves and all. The new credit line, Bair told the Journal, will ease “the mechanics of how seamlessly we can access our lines of” funding. Which we guess we could take to mean: “The Treasury is going to fund everything, but now we get to do a lot lesspaperwork.”